WEDNESDAY, DECEMBER 18, 1991
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CONSUMERS ASSURED OF ELECTRICITY SUPPLY AT REASONABLE COST
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ALL PROPOSALS PUT FORWARD BY THE CHINA LIGHT AND POWER COMPANY AND ITS ASSOCIATED GENERATING COMPANIES WILL BE RIGOROUSLY SCRUTINISED BY THE ADMINISTRATION, WITH THE ASSISTANCE OF INTERNATIONAL CONSULTANTS, TO ENSURE THAT CONSUMERS CONTINUE TO RECEIVE AN EFFICIENT AND RELIABLE ELECTRICITY SUPPLY AT A REASONABLE COST.
THIS WAS STATED BY THE SECRETARY FOR ECONOMIC ANSON CHAN, IN THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY).
SERVICES, MRS
IN A WRITTEN REPLY TO A QUESTION FROM THE HON TAM YIU-CHUNG REGARDING THE DEVELOPMENT OF A NEW POWER STATION AT BLACK POINT, MRS CHAN SAID NO FINANCING REVIEW HAD YET BEEN SUBMITTED BY THE COMPANIES FOR THE FIRST PHASE OF BLACK POINT, THEREFORE GOVERNMENT DID NOT HAVE ANY PROJECTIONS OF FUTURE TARIFF LEVELS.
TARIFF LEVELS WILL BE DETERMINED BY THE CAPITAL COSTS OF THE GENERATING PLANTS, THE TYPE AND COST OF FUEL USED, PREVAILING INTEREST RATES, INFLATION AND UNIT SALES.
SHE SAID IT WAS TOO EARLY TO SAY WHETHER OR NOT THE DEVELOPMENT OF BLACK POINT WOULD LEAD TO INCREASED TARIFFS AND IF SO BY HOW MUCH.
"HOWEVER, IT WOULD BE UNREALISTIC TO EXPECT THE COMPANIES' AVERAGE BASIC TARIFFS TO REMAIN UNCHANGED FOR A FURTHER EIGHT YEARS AS THEY HAVE DONE SINCE 1983," SHE SAID.
UNDER THE SCHEME OF CONTROL AGREEMENT (SCA) WITH THE COMPANIES, THE SHAREHOLDERS RECEIVE A NET RETURN ON THEIR INVESTMENT CALCULATED AS FOLLOWS:
* 13 .5 PER CENT OF THE TOTAL VALUE OF THEIR AVERAGE NET FIXED
ASSETS, AND
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1.
5
PER CENT OF THE SHAREHOLDERS' INVESTMENTS MADE AFTER SEPTEMBER 30, 1978
LESS INTEREST ON LONG TERM BORROWED CAPITAL OF UP TO 8 PER CENT ON EACH LOAN, AND
INTEREST AT 8 PER CENT ON THE AVERAGE DEVELOPMENT FUND BALANCE FOR THAT YEAR.
MRS CHAN NOTED THAT THE ONLY CIRCUMSTANCES UNDER WHICH THE COMPANIES COULD RECEIVE 15 PER CENT NET RETURN WOULD BE IF 100 PER CENT OF THE ASSETS WERE FINANCED FROM SHAREHOLDERS' INVESTMENTS (THAT IS, THERE WERE NO LOANS) AND THE DEVELOPMENT FUND BALANCE WAS ZERO.
"OVER THE PERIOD OF THE CURRENT SCA, THE ACTUAL RETURN RECEIVED BY THE COMPANIES HAS AVERAGED ONLY 11 PER CENT,' SHE SAID.
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SHE SAID THE TOTAL ESTIMATED GENERATING CAPACITY OF THE PROPOSED BLACK POINT POWER STATION WAS ABOUT 6,000MW, WHICH WAS ALMOST THE SAME AS THE COMPANIES' EXISTING CAPACITY.
/SHE ADDED